Federal Budget: Health Care Politics Trump Policy

KHN’s Mary Agnes Carey and Jackie Judd discuss the congressional wrangling over the federal budget and what’s ahead for the automatic cuts scheduled for January.

> > Listen to audio of the interview.

Here’s a transcript of the conversation: 

JACKIE JUDD: Good day, This is Health On The Hill. I’m Jackie Judd. The House is expected to vote tomorrow on a series of spending cuts that — in the words of one journalist — contain some “tough love priorities.”

The package is almost certain to pass in the House and almost equally certain to die in the Senate. Here to discuss what cuts are being proposed in health care programs is Mary Agnes Carey of Kaiser Health News. Welcome back, Mary Agnes.

What are the cuts? What programs would be most impacted?

MARY AGNES CAREY: There are a lot of cuts we’ve heard about all year long. Many of them involve funding for the health care law, the health care law’s prevention fund, grants programs to the states to allow them to set up health insurance exchanges in 2014. There would also be cuts to [subsidies for] individuals to help them purchase coverage on those exchanges: cuts to the Medicaid program, cuts to the Children’s Health Insurance Program, cuts to hospitals that take care of a lot of poor and uninsured individuals.

And also, there’s a provision in there Republicans favor to put a cap on punitive and noneconomic damages in medical malpractice lawsuits.

JACKIE JUDD: This is a real guns-and-butter question. One reason the Republicans are proposing this is to avoid some mandated cuts down the road in the military.

MARY AGNES CAREY: Right, there’s a series of automatic cuts that kick in on Jan. 1. Republicans do not want these cuts to impact defense, and so they’ve gone after domestic spending to shield the defense cuts from happening.

JACKIE JUDD: What are the ideological arguments that you’re hearing on the Hill that separate the two sides so widely?

MARY AGNES CAREY: You’re going to hear the word “priorities” a lot.  Republicans say enough is enough in federal spending and that the government has simply overspent. And that no taxpayer should have to pay more money to correct Washington’s mistakes.  And that these proposed cuts make good sense.

Democrats say that if Republicans would simply be open to raising taxes on some industries and wealthier individuals, they could shield not only defense, but individuals from these cuts that are coming up in January.

JACKIE JUDD: And Republicans are also arguing, are they not, that the cuts in the health care programs would not be as draconian as the Democrats are portraying it, because some federal purse strings would be loosened. It would allow states, the Republicans say, to act in a more efficient manner.

MARY AGNES CAREY: For example, in Medicaid, there’s a “maintenance of effort” provision that states have to maintain those Medicaid programs as they were before the health law passed.  And to your point, Republicans are saying if you lifted that constraint from states, they could do it in a more economical way. They could take care of that same vulnerable population. 

Of course, Democrats say that is not the case. They fear deep cuts to those individuals if this maintenance of effort provision were lifted. 

JACKIE JUDD: Given the extremely dim prospects for this in the Senate, should we view this as more of a political document than a fiscal document?

MARY AGNES CAREY: I think it is. It’s political as much as policy. It’s out there because both sides want to appeal to voters, especially those independent voters who are yet undecided, to try to get their votes, and they’re using this to try to craft the differences between the two parties.

JACKIE JUDD: And a final question: As you mentioned earlier, the military cuts are due to kick in in January of next year. Unlikely this Congress will have a meeting of the minds before then. So in the lame duck session later this year, is it likely that they will – one of Washington’s favorite phrases of the moment – ‘kick the can down the road’?

MARY AGNES CAREY: I think it is.  The bipartisanship, if you will, on this issue is that both Democrats and Republicans really dislike the idea of the automatic cuts. The problem is they disagree wildly over how to stop them.

But I think in that lame duck session, they’re going to come together and find a way to stop these cuts. For how long, to what extent, we don’t know.  But I think, to use your phrase, they will ‘kick the can down the road’ once again.

JACKIE JUDD: Thank you, Mary Agnes Carey of Kaiser Health News.

MARY AGNES CAREY: Thank you, Jackie.